Financing needs: IP gas pipeline  Russia catches Pakistans eye
By Zafar Bhutta
Published: March 20, 2012
ISLAMABAD:
As a Chinese bank has backed off from financing the $1.5 billion Iran-Pakistan gas pipeline project amid pressure from the United States, Russia has caught the attention of Pakistan, which is planning to explore this viable option first.
The decision to negotiate a deal with Russia came in a recent meeting of the sub-committee formed by the Economic Coordination Committee (ECC) of the cabinet.
Earlier, Russia had offered Pakistan that it would fully finance the pipeline if its energy giant Gazprom was awarded the contract without bidding during a four-day visit of Foreign Minister Hina Rabbani Khar to Moscow in February. In order to give its assent to the offer, the government will have to waive Public Procurement Regulatory Authority (PPRA) rules  designed to ensure transparency in government dealings.
A delegation will visit Russia soon to negotiate a deal with Gazprom, Petroleum Secretary Ijaz Chaudhry told The Express Tribune. Recently, he said, the ECC sub-committee had considered different options for going ahead with the vital gas pipeline project.
No decision, however, has been taken yet to award the contract to Russia, but Pakistan will discuss this option, he clarified.
Chaudhry also dispelled perception that the Industrial and Commercial Bank of China (ICBC) had distanced itself from the project and said we have written a letter to ICBC, asking it to clear its position as financial adviser to the project.
The Inter-state Gas Systems (ISGS) had signed a deal with financial advisers for raising funds for the project, except for ICBC which was in the process of taking approvals.
It is apprehended that a probable reason for not signing the agreement could be geo-political situation in the region, said a summary tabled before ECC.
Earlier, the sub-committee had considered approaching China and Russia to seek financial assistance for the project. However, Russia now appeared to be leading the race, a ministry official said, adding the committee also studied the Iranian offer of $250 million for constructing the pipeline.
Under the project, an 800-kilometre-long pipeline will be laid from the Iran-Pakistan border to Nawabshah.
According to sources, the project has entered implementation phase and work on front-end engineering and design, feasibility and detailed route survey has already got under way. A joint venture of Germanys ILF and Pakistans Nespak is doing the engineering work and survey, scheduled to be completed by June this year.
Cost of the project is likely to rise to around $1.5 billion compared to earlier estimates of $1.2 billion. ECC has set a debt-to-equity ratio of 70:30 for the project with the government holding majority shares on the equity side.
According to the ECC summary, tender documents have been issued to pipeline suppliers while for engineering, construction and procurement (ECP) contractors and compressor station suppliers, tender details are being finalised, which will be issued in a couple of months. These contracts are expected to be executed in the second and third quarter this year.
Published in The Express Tribune, March 20th, 2012.

The problem is owing to American pressure I hope Gazprom does not withdraw from the deal. We have seen the Russians back off from the Iran nuclear issue on sanctions due to American pressure despite the missile shield in Poland. The Russians have shown they can be bought off.

Will we really go ahead on this project with anyone? Pakistan should not expect this to be easy. We should expect US to create mammoth hurdles in the IP gas pipeline deal.

Financing needs: IP gas pipeline &#8211; Russia catches Pakistan&#8217;s eye
By Zafar Bhutta
Published: March 20, 2012
ISLAMABAD: As a Chinese bank has backed off from financing the $1.5 billion Iran-Pakistan gas pipeline project amid pressure from the United States, Russia has caught the attention of Pakistan, which is planning to explore this viable option first.
The decision to negotiate a deal with Russia came in a recent meeting of the sub-committee formed by the Economic Coordination Committee (ECC) of the cabinet.
Earlier, Russia had offered Pakistan that it would fully finance the pipeline if its energy giant Gazprom was awarded the contract without bidding during a four-day visit of Foreign Minister Hina Rabbani Khar to Moscow in February. In order to give its assent to the offer, the government will have to waive Public Procurement Regulatory Authority (PPRA) rules &#8211; designed to ensure transparency in government dealings.

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China know how it is important IP gas pipelines project to boost economy and benefits, clearly they are not friendship with Pakistan, it is really disappointing. This example is not good but that's how business is.

The Russian have a tendency to backoff at the last minute..seriously all the talk of super power and rising and shining but we have seen India, China and Russia all have their weaknesses in standing against USA which brings us to conclusion that US is still the undisputed power of the world.

The Russian have a tendency to backoff at the last minute..seriously all the talk of super power and rising and shining but we have seen India, China and Russia all have their weaknesses in standing against USA which brings us to conclusion that US is still the undisputed power of the world.

The problem is owing to American pressure I hope Gazprom does not withdraw from the deal. We have seen the Russians back off from the Iran nuclear issue on sanctions due to American pressure despite the missile shield in Poland. The Russians have shown they can be bought off.

Will we really go ahead on this project with anyone? Pakistan should not expect this to be easy. We should expect US to create mammoth hurdles in the IP gas pipeline deal.

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russian are biggest gass exporters
gazprom largest extractor of natural gas in the world and the largest Russian company
if they with draw than pakistan can build this pipe line by its self but i think they can tolerate usa pressure
i personally feel that we give this contract to russians for better relations

Dear, the fact is even though Americans have debt crisis, Americans alone control 40% all businesses around the world and think about the weight of their EU allies.They still control votes in World Bank, IMF and ADB. It will still take another 100 years to wean away influence of America irrespective of what you dream about.

ICBC, China's largest bank and the world's number one lender, was already positioned as financial adviser to IP. But then, contemplating the (sanctions) writing on the wall, it started to "show less interest", as Islamabad chose to spin it. Is ICBC totally out? Not exactly. At least according to the Pakistani Ministry of Petroleum's spokesman, Irfan Ashraf Qazid; "ICBC is still engaged in the IP project and the negotiations are still going on."

A mega-bank such as ICBC, with myriad global interests, may be wary of defying the Washington sanction machine; but other financing options may be found, as in other banks or government-level agreements with China or Russia. Pakistan's Foreign Minister Hina Rabbani Khar has just made it very clear. Pakistan badly needs gas that should start flowing by December 2014.

The problem is owing to American pressure I hope Gazprom does not withdraw from the deal. We have seen the Russians back off from the Iran nuclear issue on sanctions due to American pressure despite the missile shield in Poland. The Russians have shown they can be bought off.

Will we really go ahead on this project with anyone? Pakistan should not expect this to be easy. We should expect US to create mammoth hurdles in the IP gas pipeline deal.

i personally feel that we give this contract to russians for better relations

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This is true.
-In the 90s Gazprom bought Oil & Gas from the Turkmen and Kazakh for very cheap prices and sold it to the Europeans for high prices. The C.Asian nations had no other option as there were no pipelines that sent the resources to some other market.
-Gazprom sells 185 BcM of Natural Gas to Europe eve

​

ry month/ year (dont know exact).
-Gazprom bought the rights to export Libyan resources a few years ago with Gaddafi; in return for ca-Gazprom has a monopoly of energy supply in Europe. The EU can not apply pressure to the Russians, since the 2009 Winter Crisis when Russian turned off supply after Ukraine was "stealing" Gas from pipelines.
-A reason why Russia supports the Iranian Nuclear Program, and supported the sanctions against Iran. So an Iranian Pipeline can not go to Europe.
-60-65% of Russian State Budgets come from selling these Natural Resources to markets.
ncelling Libya's debt to Russia.
-Gazprom has a monopoly of energy supply in Europe. The EU can not apply pressure to the Russians, since the 2009 Winter Crisis when Russian turned off supply after Ukraine was "stealing" Gas from pipelines.
-A reason why Russia supports the Iranian Nuclear Program, and supported the sanctions against Iran. So an Iranian Pipeline can not go to Europe.
-60-65% of Russian State Budgets come from selling these Natural Resources to markets.

The Russians are mediocre in Technology, outcome from Soviet era bureaucracy where it was easier to drill a new well than invest in technology to gain the most from the existing well. Russia needs $130 billion investments to continue to maintain the 60-65% of their State Budget. And by being the "Middlemen" in these projects they can achieve that goal.

If Gazprom is truly interested in this Project they will not bow to US pressure.
But be very careful the Russians have a tendency to take $$$ but in times of problem will not accept blame for negligence.

The only nation that can challenge it is Inida----they have cojones---but they don't know how big they are---and they are afraid of finding that out.

Inida has the oppurtunity to come out as the leader of the sub-continent and at this time when the united states is at its weakest and so is the european union---india can make its mark count---.

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But US gave us a deal that we cant refuse - the civil Nuclear deal - for deaing with our growing energy needs and coupled with the gross uncertainities in Pakistan regarding the security situation, especially in Balochistan through with the pipeline was to be laid, we opted out of the deal..a practical move if I may say.

I am hoping from last two weeks, that somehow India should finance the project in Pakistan's tough times with Ironclad guarantees that pipeline would be protected in all times (This would be better that other 1000 confidence building measures between India and Pakistan)

Plus it will benefit to India finally, by bringing pipeline to India's doorstep.

How does US expect to garner friendly sentiments in Pakistan by blocking their fuel lifeline and making the average population suffer? Seriously handing out aid does not help in long term positive image. People just see it as a opportunity to fill their pockets and leave without any sentiments.